Apple Pays $60 Million for iPad Name in China

By Audrey Wozniak

Jul 2, 2012 8:12am

More than $60 million and two years later, Apple finally owns the rights to the name iPad in China.

Apple and Proview International had been embroiled in a tangled web of lawsuits and countersuits disputing claims of infringement, defamation, and fraud since 2009. The settlement mitigates Apple’s concerns about blocked iPad sales in China, and may come in the nick of time for LCD screen manufacturer Proview, which filed for bankruptcy in March.

The Guangdong High People’s Court announced in a statement today that the two companies had come to a resolution over ownership of the IPAD trademark with Apple paying Proview $6o million.

Xie Xianghui, a lawyer for Proview, affirmed that “this is a result that is acceptable to both sides.” However, Xie mentioned that the company had settled for much less than the $400 million it had hoped for, feeling pressure to settle debts. Xie also stated that even Apple’s settlement, nearly four times the amount it had originally offered, might not be enough to stave the looming threat of Proview’s bankruptcy.

In 2000, one year before Apple announced the development of its iPad, Proview registered the IPAD trademark in Taiwan, following suit in China, Europe, Indonesia, Mexico, and other international markets in the next four years. After Proview’s line of tablet computers bearing the name floundered, in 2009 Proview Electronics, the company’s Taiwanese subsidiary, sold the trademark to an American company IP Application Development (IPAD) for $54,800.

Proview Electronics claimed in its lawsuit that it did not realize that “IP Application Development” was an Apple shell company, which was in the process of purchasing the rights to the IPAD trademark internationally before launching product sales across the globe.

Meanwhile, the Chinese trademark office rejected Apple’s attempts to transfer rights to the trademark in mainland China.

While Taiwan-based Proview Electronics sold Apple rights to the IPAD name in many different countries, Apple soon discovered that the rights to the name in mainland China were not included in that purchase and that a different Proview branch, Shenzhen-based Proview Technology, still maintained rights to the trademark on mainland China. Once Apple went to market with the iPad, Proview Technology asserted their trademark ownership and demanded $800 million for transfer of rights.

Apple, which had started selling iPads as soon as it had purchased the trademark, sued Proview Technology in China for continuing to claim ownership of the IPAD name. After the Shenzhen Municipal Intermediate People’s Court ruled in December of last year that Apple did not have rights to the name in China, Proview countersued Apple in the U.S., asserting that the company was fraudulent in acquiring the trademark through a dummy corporation.

Proview also applied to local customs to ban Apple iPad sales in two major Chinese cities, threatening to push for a national ban if Apple did not compensate the company at the steep base sum of 10 billion yuan ($1.6 billion). The lawsuit was dismissed in May after Apple argued that it had purchased ownership to the name in 10 different countries. Since then the two companies had been in court-sponsored mediation.

While Proview and Apple were embroiled in their legal battles, the Chinese company was struggling to survive. When Apple first bought the IPAD name from Proview’s Taiwanese branch, the company owed nearly 400 million yuan ($63 million) to eight banks. In March of this year, one of Proview’s creditors filed an application to declare Proview bankrupt and have its assets liquidated, hoping to recover millions of dollars in debt.

Apple originally offered Proview a $16 million settlement, while the latter held out for $400 million. Today’s report of Apple’s $60 million payout marks the end of the dispute, though perhaps not the end of Proview’s legal proceedings, as the settlement may not be enough to prevent the company being declared bankrupt.

As for Apple, which made $39.2 billion last quarter, it takes roughly three hours and twenty minutes for the company to make $60 million. Now that the company has free reign to sell the New iPad 3.0 in China, its second-largest retail market, Apple may very well be able to shave a few more minutes off of that time.

 

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